Really, I’m Not! Or Am I?
I’ve been feeling too lazy in the last few days to bother going out much even though I’m on vacation over the Holidays. Granted, the record-breaking 46-centimetres (18-inches) snowfall in only 15 hours over Montréal on the 27th has made going out unappealing, especially since the City expects it will take more than a week to clear up the mess, which means driving and parking around town is a total nightmare.
Still, I’m a bit at a loss to explain why I’ve been putting off going to the Musée des Beaux-Arts de Montréal to see an exhibition I really want to see: Il était une fois l’Impressionnisme. After all, this city does have a completely underground subway and I live only two blocks from a station! But the mere thought of having to bundle up to brace the cold and putting on my heavy and uncomfortable winter boots is enough to make me say to myself, “Nawh…”
So what I have been doing instead?
Well, aside from going to my sister’s for two days over Christmas, I’ve done some reading online. I’ve done a few minor but helpful updates on the web application we use at work. (I consider that stuff more of a hobby than actual work.) I’ve watched some TV. I’ve called a few out-of-town friends. But mostly, I’ve rejigged yet again my budget spreadsheet, which is leading me to seriously question my sanity …in the sense of saying to myself, “Maurice, you’re obsessing over this thing!”
But I think my reasons for coming back to it stems from the fascination I hold as I assess what I’ve accomplished thus far.
- The October 2011 version of my budget was so opaque in comparison to my November 2012 version that it felt like a runaway train. It seemed to work although I didn’t understand how or why, but then I had to make several corrections when it derailed a little bit. In my newest version, however, the Summary tab matches up to the penny at all times with my actual bank balances, which eliminates all confusion and ambiguities.
- According to this August 2012 Globe & Mail article, “the average Canadian’s non-mortgage debt reached $26,221 in the second quarter of 2012, up $192 from the previous quarter,” a level the article calls “a new record high.” I seem to recalll that, when I did my first serious budget in a decade shortly after I started my job in March 2006, my debt was about 125% that figure stated for 2012. Being used to living on very little and not knowing if the job would become permanent, I achieved the remarkable: I brought it down to just 38% by January 1, 2008. Then, however, I did that crazy thing of getting married, so when I picked up the pieces (and myself) and restarted budgeting in October 2011, I was back up — far less deeply than in March 2006, at about 81%. Yet in only 15 months (i.e., in about one week), despite expensive curve balls, failures, and lawyer’s fees for the divorce, I’ll be at 33% and totally in the clear by the end of 2013 (probably much sooner given an important variable I haven’t factored into my calculations and should kick in by early spring).
- I keep coming up with creative and flexible ideas not only to accelerate this debt-elimination plan but also to actually build some savings and to find ways of eventually contributing more towards retirement. Basing myself on the principle of “pay yourself first,” I allow myself a lot of wriggle room on every paycheque — so much so, in fact, that during cold winter months when go out even less, I end up not spending all my “allowance.” So, instead of spending it during the next period, I throw whatever excess — even if it’s only 10 bucks — into debt servicing or savings. It’s amazing how quickly a few dollars here and there add up quickly!
I’ve said it before, but this budgeting thing is not a chore but an ultimate act of optimism for me by virtue of looking years into the future. I’m fortunate in that there’s enough coming in, but the discipline budgeting imposes is allowing me to see some fabulous options in front of me.
- I should be able to pay for my next car in a few years out-of-pocket, which would also be less expensive since many car dealers give a considerable discount on a cash purchase.
- Since I only get three weeks of vacation time (which is not enough) until I reach 10 years of seniority at work but my employer allows me to buy up to five days of vacation time per year, I will soon be able to effortlessly afford such a purchase.
- Going forward, I will always have savings to cover vacation expenses “as I go” rather than putting them on credit and worry about paying later, which is what got me into debt in the first place (aside from the fact I had no choice but to live on credit prior to March 2006).
- I can also think about making big purchases like air-conditioning and furniture without getting back into debt, or at least not on a long-term basis. That’s how I managed to buy winter tires and a new suit in mid-November and had them paid off by Christmas.
- And best of all, I project that in only three years, if nothing goes extraordinarily wrong, I could have from six to nine months of clear salary sitting around, building a bit of interest but being readily available should some personal disaster occur.
The only grey cloud in this sky filled with silver linings is that purchasing a condo in Montréal remains out of my reach. I’d need to make $15K more a year to even scratch the entry level and I sure as hell ain’t going to get myself a(nother) husband just to make a condo happen, so after the extensive number-recrunching I’ve done, I’ve not only stopped even entertaining the thought but also stopped feeling any regret about not being able to achieve that one goal, for really, in all other respects, I’m feeling incredibly empowered and optimistic financially for the second time in my life.
I kind of fell off the budget-tracking wagon just after my summer vacation. My mammoth workbook stopped making sense after making a huge annual payment in early August for something I had planned, so I figured I needed to put the thinking cap back on.
I wasn’t off by thousands but by several hundred dollars. Still, noticing that this was the second time I needed to transfer funds around to bring myself back in sync, I knew I was missing something …but what was it? My theory of virtual or “make believe” jars didn’t get reflected in reality.
I started thinking that perhaps I needed to make my virtual jars more real by moving funds into a savings account when they weren’t needed and bring them back into my current account “just in time.” That way, I would not only not accidently spend those funds but I would also earn a tiny bit of interest which my chequing account doesn’t give. But trying to think about the schedule of transfers between accounts and how much savings I should have at this point gave me head cramps which, in turn, led me to go back to budgeting auto-pilot mode much as I had before last autumn, except this time for only two months.
I finally mustered up the courage last weekend to attack the task at hand. That’s when I immediately noticed that I practically went underground in those two months and, as a result, managed to amass a tidy surplus. But more importantly, I finally found the error in my workbook that had forced me to make those few significant adjustments in the previous year.
Amounts in my base budget changed in the course of the last year. Some line items went up or down; one line item — my landline — disappeared, and my net income decreased enough (due to starting to contribute to the pension plan at work) to throw everything off in my workbook. And that’s when the lightbulb moment came: I had coded stuff to refer to the base-budget line items, so when some changed, they retroactively updated some of the other spreadsheets, effectively rewriting my financial history in difficult-to-trace ways.
So, the solution is not just to have a separate savings account, which certainly helps to make things more concrete, but also to enter actual amounts in cells rather than making a reference to the fluctuating budget line items! At first that seemed counterintuitive for the programmer in me, but I’m seeing now that it’s really a matter of applying the K.I.S.S. principle.
Of course, there’ll be unexpected expenses along the way as there were last year. Take, for instance, that I got my winter tires stolen (I assume by someone in the Charest brood), or that a client I’m having to meet later this month is such a high-profile individual nationally that I can’t possibly show up to the meeting looking like a pauper. But, with a good and realistic budget, it just means it’ll take a few weeks more to reach a zero debt load.
Speaking of debt load: it was at about 60% of my annual take-home pay when I started my budget last year, which I’m given to understand is much less than half of the average Canadian household debt. In one year, I brought that down to about 36%, and I’m still projecting being at or near 0% by the end of 2013 — just as I had calculated a year ago. That’s a pretty damn enviable position to be in, and it means that I know exactly how I will be able to pay for my car’s replacement when that time comes.
Can’t complain about that!
Mistakes, And Recovering From Them
Imagine my surprise a few nights ago when I tried to use my debit card at a Double Pizza outlet downtown but the little device declared not once, not twice, but thrice that there were “insufficient funds” in my account to cover a measly 7 dollar purchase.
According to the “Cash Flow” tab in my fancy dandy budget, there should always be extra money sitting in my account because of the amounts I set aside every paycheque. What’s more, I have a $700 overdraft on my account, so it takes a lot to crash through the bottom. Either Double Pizza’s direct-debit device was defective or something fraudulant happened in my account.
After my third attempt, I looked dejectedly at the pizza and fries on the counter and told the guy at the cash, “It looks like that food is going to go to waste.” But much to my surprise he said, “No, no, no, go ahead and eat, and come back later to pay me.” I frankly couldn’t believe that such trust could exist today in a big city — or anywhere, for that matter — but I suppose I don’t look like the kind of guy who would deliberately try to pull a fast one.
So, I ate and immediately trekked east on Sainte-Catherine to find the nearest branch of my bank with a banking machine. First, I inquired on the balance in my account and got that sinking feeling when I saw that it was indeed in the red by more than $700. Next, wanting to do good by the guy at Double Pizza, I withdrew $20 from my line of credit, walked back to pay him, and took the métro back home so that I could immediately sign into my online banking to find out what the heck was going on.
It turns out my building’s super made the first mistake. She made two deposits for February’s rent. For her first deposit, she forgot to change the date on her stamp, so the date appearing on the back of the cheques for that batch was January 4. In that batch she mistakenly included my post-dated cheque for March’s rent. Then for her second deposit, which she correctly dated with a February date, she included my February rent cheque. Once in the system, though, there are no further checks; there is no system to verify the value date on cheques, so both my February and March rent cleared my account on February 3.
Fortunately, because of the funds in my account on that date plus my overdraft, the second rent cheque didn’t bounce. That’s good, because I learned later that the fee nowadays for a NSF cheque is $42.50. However, there’s a $5 fee for going into overdraft plus so many cents’ interest for each day I’m in overdraft. While we’re only talking about $7 and some change, I argued that, on principle, I shouldn’t have to pay that fee because I didn’t deliberately go into overdraft. My bank, which is also my employer, readily agreed and immediately reimbursed me.
But seeing my account in negative territory forced me to look again at my budgeting workbook. Indeed, this incident had the effect of putting me back to zero — of starting on a clean slate. Plus you’ll recall that I had an uneasy feeling about my workbook because it looked like it worked but I couldn’t understand how and why. It’s only after spending nearly two hours studying every little formula throughout the workbook that I finally found MY mistake: in one spot, I was effectively counting the same amount twice! I thought about how my dear Cleopatrick would have a good laugh about that, seeing that I once “accused” him of double-counting, and here I was doing the same thing!
I would have had nearly $400 sitting around for later use if it hadn’t been for my mistake, meaning I still would have gone in overdraft but I wouldn’t have busted through the floor. In other words, I still would have had to make the argument that I shouldn’t have to pay overdraft fees, but I wouldn’t have had that moment of panic at Double Pizza. Plus I probably only would have discovered my super’s mistake this weekend.
Bottom line — pardon the pun — I fixed my workbook, transferred funds from my line of credit to create the savings I thought I had, and rejigged my expenses for February so that I’ll be on a tighter (but workable) budget than usual for the next two weeks. That’s no biggie because I’m not much in the mood for going out and doing much in the middle of February. Plus my March rent has been paid a full month ahead of time. So maybe my super’s mistake was a good thing in the end, as it finally made glaringly obvious my own mistake and I can now have full confidence in my masterful workbook.
I would love it if the old man who owns the building could be convinced of having us on pre-authorized debits. Mistakes can happen with those, too, but not as much if someone knowledgeable were to handle them. Ahem! Unfortunately, the old man doesn’t deal with the bank where I work.
Wondering… Too Good To Be True?
I went to bed shortly before midnight last night, dead tired and prepared to sleep at least 8 hours. However, shortly before 1:00 am, a loud THUD resounded from upstairs (i.e., where the Family-From-Hell resides) and woke me up. I swear they throw bowling balls on the floor up there! The end result, though, is that I couldn’t fall back to sleep, and I’ve found that if I can’t fall back to sleep after a half-hour of tossing and turning, it’s better to get up for a little while and then go back to bed.
Thus I found myself watching a bit of TV, including an infomercial on The Magic Jack, a VoIP device that costs a fraction of what I pay every year for phone service from Bell. It sounds almost too good to be true! From what I gather, given that I already get my Internet service from the local cable company, I could have a slightly more expensive variation of this thing and not have a computer turned on all the time in order for it to work. Obviously, recalling that I know of someone locally who got this gizmo a while back and being extra budget-conscious (obsessed?) lately, I couldn’t help but want to look more deeply into this possibility.
Bell pissed me off again recently, which is something it seemed particularly gifted at doing. I mean, at the best of times, Bell annoys me by wasting so much paper with at least one promotional letter per month plus sending me an envelope to pay my bill even though I’ve been on pre-authorized debit for at least a year. I was all happy with myself back in November when I found a way of saving over $10/month on phone services I didn’t use. However, this month Bell increased the cost of my long-distance plan by $5/month, so coupled with its $2/month basic fee increase and the Québec government’s 1 percent increase on the sales tax, my monthly savings have shrunk to less than $3/month. When I figured this out, I tried to look on the bright side and thought to myself, “Well, if I hadn’t asked for the useless services to be removed, I would be at well over $100/month by now.” Except this product has now come back to my attention, and I figure that not only could I reduce my phone budget by nearly 90% per year, but I could finally stick it to Bell.
I would obviously lose my current “514” phone number in order to get another one, but I’m not as attached to it as I was to my “902” number in Nova Scotia, which I held for some 15 years. But the thought of redirecting ≈ $900 per year on debt or savings or vacation money has the ol’ wheels in my head turning. And I’m sure my financial hero Gail would agree that every little bit counts.
Yet Another Grab Bag
I suppose wishes for a Happy New Year are in order even though, unbelievably, we’re almost at the mid-point of January already. Indeed, the first two work weeks of 2012 are already done, although the first, for me, was only three days long.
I’ve had a whole whack of blog topics come to mind in the month since my last entry, but somehow I got distracted by other things.
Wondering If It Works
Many months ago, the geek in me found that it was possible to edit what’s known as the .htaccess file for a website to exclude visits from anyone whose IP is from a specific country. For instance, one common practice is to exclude anyone with a Russian IP given how many spammers use that set of IPs. But for my part, in an attempt to feel more free to write what I wanted in aMMusing, I added commands to exclude all IPs from a particular country in North America. You’ve got three guesses (literally!) and the first two don’t count. I’m not certain these commands really work, but like a gift, it’s the thought that counts, I suppose.
A Marvel I Don’t Understand
I told you at great lengths back in October that I did my budget this fall on a massive spreadsheet. It seems to be working well three months into maintaining it, although I can’t understand why. Crazy, eh? I mean, I developed it so I should be able to understand it! Then again, this isn’t the first time I developed something that works without understanding why. Some would say I’ve become totally obsessed with my budget spreadsheet, as I keep working on it and looking at how the numbers are playing out; however, there’s something extremely empowering about it for me since it’s about looking towards the future and figuring out how to build an emergency nestegg (and how fast) and how I’ll pay to replace my car (which I expect to do around Junior’s 10th anniversary in Spring 2013).
My financial hero these days is Canadian best-selling author and host of ‘Til Debt Do U$ Part (with the “Home Edition” aired on HGTV), Gail Vaz-Oxlade. Not only does she make a lot of sense, but her blunt “tough love” bits of advice pass well because of her delightful accent (she was born in Jamaica).
Among Vaz-Oxlade’s bits of advice, there’s the need to create a budget. Some people equate “budget” with “cutting back,” just like others equate “diet” with “losing weight,” but that’s not her point. Instead, it’s the preliminary step to finding out exactly how much money is coming in and how much is going out on what. It has to include not just weekly or monthly spending but quarterly and annual obligations as well, like property taxes, water taxes, haircuts, dentist visits, vehicule registration, and so on. That’s the point where one sees where there’s fat that can be trimmed or cut out entirely.
She gets the people on her show to stop using credit cards and even debit cards and rely only on cash which she places in specifically labelled jars. (Personally I use my debit card as cash and rarely to get cash from an ATM, and I find I spend less that way than having loose cash in my wallet and pocket.) In some more extreme cases, she cuts back participants’ expenses by as much as 90 percent. If they complete the challenges she imposes on them over a few weeks, she gives them up to $5,000 to go towards their debt.
I started with my budget as she suggests and found that, although I’m in debt, my income is greater than my expenses (unlike most of her participants). That’s the most enviable situation to be in. For sure, I could go to a barber instead of the delightful Gabriel for my haircuts, but that would only save me about $8 per paycheque and that cutback (pardon the pun) isn’t necessary at this point. In the end, my budget maps not only the net amount of each expense, but also the monthly and, more importantly, the per-paycheque net amount for each. Indeed, I always wondered why the two “extra” pay periods for someone like myself who’s paid every two weeks don’t seem to be “extra pay days” as one would expect when just looking at the surface.
I then considered, but stopped short on, imposing the “magic jars” system on myself. Instead, I took a two-pronged approach: the “calendar” approach for my cash flow in one sheet so that I can see when certain recurring amounts go out, and a combined “virtual savings accounts / daily expenses” approach in another sheet for daily expenses including those I automatically set aside (i.e., not spend right away), namely 6 fixed amounts ranging from $4.20 to $43.30 per paycheque for haircuts or any of those irregular or occasional musts.
As a result, in the cash flow sheet, I have only one line per pay period for stuff I lumped together like food and other expenses. During the current period, that amount goes up based on the entries I make on my daily expenses sheet. On payday, the surplus or deficit from the previous period is added to or subtracted from the net paycheque — often when there’s a surplus, I put it on my line of credit — and the 6 amounts above are immediately deducted from that “lumped together” total so that I will have the cash to pay for those things when they’re due. That leaves me with the remainder to play with, but although sometimes it seems like the cash flow is in the red, in reality the variable accumulated sum of those 6 “virtual accounts” remain part of the actual balance in my bank account.
What’s discombobulating about this approach is that the balance in my bank account doesn’t mean anything anymore. It seems like it should be heading into negative territory one of these months, but as long as I trust only what I see in my spreadsheet for any given day, that’s really where I stand. I don’t know how many times I re-examined my formulas to make sure I’m not double-counting (or not counting) some expenses, but the logic holds even though the bottom line in my bank account never seems to add up to anything I see on my spreadsheets.
So, I’m staying the course. I think the worse thing that can happen is that I’ll find that I’ve been too aggressive attacking my debt — it looks like I’m putting over 24% of my net towards debt repayment, which I gather is about 9% more than what Vaz-Oxlade suggests is optimum, although her 15% figure might be for when someone HAS to pay more than that in order not to sink further in debt — in which case I’ll just have to backpeddle a little bit on that front. Besides, even if it’s only a few dollars here and there, keeping one’s debt as low as possible means lower monthly interest charges on the line of credit on which I consolidate my credit-card expenses. Not only is the interest rate much lower on the line of credit, but the interest is paid monthly from my main account, meaning the outstanding balance on credit doesn’t balloon, not to mention that I never pay a penny in interest on credit cards due to the 21-day grace period.
Having Much of a Life Lately?
As you can tell, not really, but unlike a year or so ago, that’s not depressing me. Funny how only a few months in therapy changed my outlook so fundamentally.
Like I said, the budget thing has become very empowering for me. It’s actually set up to be the worse-case scenario, yet despite my expensive screw-up a month ago, it still looks like I’ll be relatively debt-free by the end of 2013. Given how time flies, that’s nothing and extremely encouraging! While I’m currently not following Vaz-Oxlade’s “pay yourself first” suggestion, that’s only because I have something up my sleeve that will turn this worse-case scenario on its head.
But I haven’t been going out much lately, either. I get that way in winter. However, if I must be candid, I haven’t felt like it because of the 20 or so pounds I gained in the last two years. A lot of my clothes doesn’t fit well, but rather than buy new clothes, I prefer to lose the weight. Granted, by that time, that clothes will be in need of replacing, too, but I rather buy “skinny clothes” than adapt and buy “fat clothes.” I may like bears but I don’t see myself as one. Besides, I prefer hunky bears over fatty bears.
Any Vacation Plans?
Yup! That’s in the budget and it’s also why I want to lose weight. My first vacation will be for a week around Easter when I’ll be flying to Moncton and spend that time with my mom. But the second vacation — the “for me” fun vacation — will be the first two full weeks of August when I plan to spend a few days in Provincetown and then drive up the coast to Moncton (again) and Halifax. It’s not my dream vacation to Mykonos just yet, but I hope that’ll come in 2013 or 2014, especially if I can find someone to travel with. It seems like it would be more fun to travel to Greece with a friend than on my own.
Do You Still Follow Politics?
Avidly! But whether it’s in Québec or Canada or the U.S., there just seems to be so much I could be railing against that I don’t know where to start. However, combined with the uncertain economy, politics has become rather depressing. There comes a point where it’s better to go inside a little bubble to preserve one’s sanity.